May 7, 2008

Competitive Intelligence

Recently, one of the people who receives this newsletter wrote in to ask, "What would you think of a company that says we don't really have any competitors, because no else does exactly what we do. As a result, they choose to ignore information regarding the closest competitors."

It's an interesting dilemma and it's our topic for this message: how much time to spend studying and analyzing our competitors and when to just let it go.

Is it possible for a company to have NO competitors? Theoretically, it's possible, I suppose, but it's very unlikely. After all, even if you are the proud owner of iron-clad patents in a business so new and innovative that nobody else is in it yet, you still have a significant source of competition from other demands on your customers' time and money.

And I'm not even sure having no competitors is a desirable situation. Having no competitors may sound great, but in reality, it will probably make your sales process more difficult. Why? Because your customer will have no frame of reference and no points of comparison to use in developing an understanding of what the firm is offering.

In the classic "elevator story" structure that Geoffrey Moore presents in "Crossing the Chasm," the final part of that 30-second sound byte defining your entire business model and value proposition is "Unlike our key competitor X, our product/service [key differentiator]." The obvious point: If you can't make some kind of comparative statement, it's hard for the buyer to develop contextual understanding of what you offer and why it has value.

There are some other reasons why ignoring or denying the existence of competitors may not be a wise approach to business.

First of all, even if you know that nobody else is doing exactly what you do, the market may not see you as being that unique. Life is, in William James's phrase, "a booming, buzzing mass of confusion," and we have to do a whole lot of filtering and sorting just to make sense of it. Except for the things that are of most immediate, intimate concern to us (like our own families, our own businesses) we are likely to pigeonhole people and things into convenient slots. That means a customer may lump you into some broad cognitive category--IT consultant, sales trainer, healthcare provider, whatever--even though you do something that's uniquely different and that in your opinion should invalidate that kind of gross categorization.

Another thing to keep in mind is that sales is the epitome of knowledge work. And it's pretty hard to succeed in knowledge work from a position of ignorance.

Finally, we all need to remember that sometimes the biggest "competitor" we face in closing a deal is the option the customer has of doing nothing. There's always competition for the attention and budget of your prospective customers.

Which brings us to the main reason to be aware of your competitors. Having an accurate and up-to-date understanding of your competitors--whatever form they may take-will provide you with insights into ways to differentiate yourself and to craft a compelling value proposition. As we've said before, if you're not selling based on unique value, you may be selling on behalf of your competition.

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